Many people are finding that they have sustained some serious financial damage during the recent economic recession. They are not only hurting from lost wages, depleted retirement funds, and past due bills, but their credit has taken some pretty big hits as well. Damaged credit will be one of the most lasting residual effects of the recession. Your financial recovery from the recession will depend heavily on correcting any credit problems that may have occurred from losing your job or some other unforeseen financial crisis.

You may want to consider refinancing as a way to stabilize your finances. You could refinance your mortgage to lower your mortgage payments. This could leave a little extra income available at the end of the month to pay off other bills that need to be paid. Another consideration might be to get a consolidation loan. One thing you want to make sure about when getting a consolidation loan is that your end result monthly payment is lower than all your combined payments now. In the long run you will end up paying more with a consolidation loan. But, it will help you clear up any cash flow problems you are having and help stabilize your finances.

There is one major road block to using refinancing as a way to get your finances back on track. If you are like most other people, then you are emerging from the recession with pretty bruised credit. You are going to have to refinance with bad credit. Moreover, with the state of the credit markets your finances are going to be scrutinized a little more closely than they would have been in the past. To qualify for the best refinancing with bad credit and get the best interest rate, you are going to have to do some planning.

To qualify for bad credit refinance you are going to have to prove you are worth the risk. You have to have a plan to do this. The first thing you should do, if you do not already have one, is put together a budget.

You will also want to put together a spreadsheet showing all you expenses. This can be easily done with software like Quicken. Once you have these two tools you can create your plan.

You will want to cut your expenditures as much as possible. Your primary goal over the next three to six months, preferably six months, is to make sure all bills get paid on time. You are trying to build a good payment track record. Your budget, expense spreadsheet, and six month track record of on time payments will be the most important aspects of your argument that you can repay the loan.

Over the six months you will also want to dispute any incorrect information that is on your credit report. The more incorrect negative entries you can get off the better. The goal here is to reduce the lenders perceived risk of lending money to you.

It will be painful. But you have to do it. When you are refinancing with bad credit you have to give the lender as many reasons as possible to lend to you. Having a budget, being able to show your expenses, and showing an increasing propensity to pay your bills on time, will give credence to your argument that you are a good risk for a loan. If you walk into the lenders office with a bad track record and your finances in a shamble then you are not likely to get the loan. Qualifying for a bad credit refinance loan will take patience and fortitude on your part. But, the long run payoff is that your finances will stabilize and you will recover, any damage the recession may have caused, well before you normally would have

By: Beau Hooks